The majority of countries in Asia are energy importers, with net import bills ranging under 2 percent of gross domestic product (GDP) for Vietnam to more than 10 percent for Thailand, according to Fitch Ratings.
Since oil is a large share of the consumer's basket, a decline in prices is akin to a tax break and will likely boost spending in other goods and services. Furthermore, cheaper oil reduces the cost of inputs of energy-intensive production, thereby supporting economic activity.
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Falling oil prices also depress consumer price inflation through its sizable share of the CPI basket.
"Disinflation as a result of lower oil prices could also contribute to GDP (gross domestic product) growth less directly in some countries, by facilitating a more accommodative monetary policy than would otherwise be followed," said Andrew Colquhoun, senior director, sovereigns at Fitch Ratings.
Oil has taken a beating following OPEC's decision last Thursday not to cut oil output to support prices, with Brent crude in free fall, tumbling to $68.15 a barrel on Monday.
Brent has fallen more than 40 percent since June, as rising shale production in North America created an oil glut amid mediocre global growth environment.
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Window for policy action
In addition to helping the region's growth-inflation dynamics, lower oil prices could also have a positive impact on fiscal accounts,opening golden opportunities for governments to abolish burdensome subsidies as there will be little opposition to such action given its subdued impact on inflation.
"The extent to which [governments] are able to realize the potential fiscal benefits will be determined at least partly by how policy makers respond - whether they use budget windfalls to increase spending or reduce deficits," said Colquhoun.
Both the Indian and Indonesian governments have already taken advantage of the price decline.
The Indian government deregulated diesel prices in October, an important step to making fiscal accounts more robust against future oil shocks since both diesel and petrol prices are now determined by the market.
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The Indonesian government, meantime, raised subsidized fuel prices by more than 30 percent on earlier this month, a move that is expected to save the government more than $8 billion next year, according to Reuters.
A blow for some
While most Asian economies stand to gain from lower oil prices, there are some losers in this environment, say economists, highlighting Malaysia.
"A large part of their fiscal revenues come from commodity exports, so we will see fiscal (revenues) under pressure because of commodity earnings declining," said Taimur Baig, chief economist, Asia at Deutsche Bank.
"In addition, commodity exporting companies that have borrowed in U.S. dollars and have mostly receivables in ringgit will face pressure. So there's risk on the ringgit, and foreign ownership of Malaysian bonds."